Medicaid Involved Purchase and Looking for Solutions

[Chris Evans]

I've got an unusual situation I've never dealt with before. I was contacted by a seller trying to sell her mother's home AS-IS (mother is alive, but in a nursing home with severe dementia). The mother is on Medicaid to pay for her nursing home care. The daughter made it very clear she does not want to make any money on the sale of the house. The house is just a drag on the children's finances and is in rough condition. To make matters worse, the house will be taken for unpaid taxes if they are not paid this year. Honestly, I really don't even want the house, but if I can help this family out and make a few dollars too, I would like to work something out. I would consider wholesaling it, BUT....

...Here's the CATCH.

Any funds received from the sale of the house will go to Medicaid, and the house must be sold at or above what it currently appraises for.  So, the seller has to sell it for the appraisal price. Because of this, I know it would be very difficult to wholesale. The neighborhood it's in would not support a good fix and flip situation (maybe if really cheap products were used, but I try to provide quality with my fix and flips).

I'm not willing to pay cash for the whole thing for multiple reasons. So, the only option I could come up with is to purchase it with seller-financing as a buy and hold property. The seller is happy with that idea IF Medicaid will allow seller-financing. Basically I would be making monthly payments directly to Medicaid, if this is allowed.

My questions:

1. Has anyone ever dealt with Medicaid when purchasing a distressed investment property?

2. If so, do you know if Medicaid would allow a Seller-Financing deal, where I pay monthly payments to Medicaid (or through the seller)?

3. I've tried to reach the Legal department of Medicaid to get answers, but no response yet. Do you know how I could find this information?

I asked my attorney, but he did not know that particular answer.

I could walk away from this, but as I said before, I like to help people as much as possible...if possible.

Thank you in advance for any input!